In discussing government plans to renegotiate prices, Richard Barker, the director general of the Association of the British Pharmaceutical Industry, notes that the UK has already lost hundreds of pharma jobs and further industry investment could be lost if pricing talks fail to produce a reasonable outcome. And so Barker tells Reuters that the Department of Health, which is renegotiating the Pharmaceutical Price Regulation Scheme in hopes of reducing drug costs, should agree to a ‘realistic’ pact as soon as possible.

Barker declined to comment on the scale of any price cuts being discussed but said he was worried officials were “not as realistic as they need to be”, given the industry’s slowing growth due to generic competition and a lack of new drugs.

“These discussions are taking place at a time when the industry globally is under pressure and our role here in the UK is under unprecedented scrutiny from managements of global companies,” he tells Reuters. “Whether those managements sit in New Jersey or Tokyo or London, they have the same calculations to make, which is where will they put what will be fewer investments in future?”

The last pricing scheme, which included an average 7 percent cut, had been due to run until 2010 and the government’s decision to break it early has fueled uncertainty, he says. While drugmakers wouldn’t quit the UK outright if a deal isn’t satisfactory, the outcome will influence decisions about future investments. “The new investments will be even more likely to go to sites in Asia,” Barker says. “There are a number of cases where companies are waiting to see what happens.”

The UK currently accounts for 9 percent of worldwide research and development into new drugs, despite making up less than 3.5 percent of the world market, according to Reuters. Yet its R&D expenditure has stalled since 2002, amid a wider downturn across Europe. In the five years between 2001 and 2006, only two drug research sites were established in Europe, while 18 closed, according to industry figures. During the same time, 14 were set up in Asia.

The government says its aim is to ensure taxpayers get value for money and both sides in the PPRS talks have agreed any deal must be based on four principles — value, reward for innovation, rapid uptake for new drugs and sustainability.

Hat tip to Pharmagossip